When you see the strength of your pay packet diminishing each month, with less available for doing the things you love or for putting money aside, it can be disheartening. This is especially true when you’re at the beginning of your career, when there is less of a buffer and every penny really does count.

The cost-of-living crisis is biting hard. High inflation means prices are going up, which in turn is impacting how much disposable income we have to spend each month.

Crucially, this financial storm we’re all weathering is also having an impact not just on spending, but on how we interact with, and talk about money.

Research from technology giant Samsung UK and social investing network eToro, Gen Z are now the generation most likely to talk about money, with the vast majority (78%) attributing this to the cost-of-living crisis.

Additionally, 62% of Gen Zs said the cost-of-living crisis has helped them to understand terms like inflation and recession – most likely due to their prevalence in the media. Most tellingly, 79% said it’s made them more aware of their finances.

Being aware of your finances is no bad thing – it pays to be financially savvy and make your money work harder for you. Letting whatever you have sit in a current account that likely pays no or low interest will see your hard-earned cash eroded by inflation and its value diminished.

It’s also fair to say the Autumn Budget, the government’s latest financial update where it set out its spending plans, will have a massive impact on many young people’s pay packets, and is itself a major factor to consider when it comes to your financial health.

Let’s take a look at the main financial issues facing Gen Z:

Some good news – the National Living Wage is increasing

For Gen Zs who have not yet joined the workforce full-time, or have taken their first steps into a career in retail or foodservice, the rise in the National Living Wage is a welcome boost, as it will benefit your take-home pay.

The increase, worth nearly £1,800 a year for a standard 40-hour week, arrives in April 2023. Okay, it’s still a way off, but the extra £100 a month or so could help cover rising costs or be used as a rainy-day fund once it kicks in.

Less positive – income tax is on the rise

While the living wage is going up, overall wage stagnation remains an issue which will impact many young people until at least 2028. Real wages – or, the strength of your pay in relation to prices – will stagnate until at least 2027.

Plus, with the freezing of tax bands dragging more and more workers into paying tax by 2028, many Gen Z workers may well end up paying more tax for longer.

So what does this mean? eToro estimates the average UK earner with a salary of £33,000 in 2021/22 would pay a total amount of £28,944 in income tax over the next five years if the tax band thresholds were frozen for the whole period.

This compares to £24,145 in income tax if the thresholds were linked to inflation over the same period. That’s a big difference of 20%. For those starting out in their careers and trying to put money aside for their future, this tax raid not only slows earning power, but future wealth too.

Paying for where you live is expensive

It’s sad to say but, for many of us, buying a house is a dream nowhere near reality at the moment, following years of rapid price growth. Last year alone, prices increased 9.5%.

However, for those lucky enough to be in this position in the next 12-18 months, the Stamp Duty freeze will provide an incentive to try and put some money aside for a deposit.

Nevertheless, with the average house now costing £295k, this will likely still be out of reach for many, and the average age of a first-time buyer is now reaching 32. Plus, if you do get a mortgage, the high interest rates we’re seeing currently means monthly repayments will be higher than they were 12 months ago.

Renting isn’t looking economically attractive either. Rent in the UK overall has risen 12%, while in the Capital it has increased by 18% year-on-year, according to Zoopla. Data from SpareRoom shows that even if you just want to rent a room in London, you’re looking at £857 per month, compared to an average of £554 elsewhere in the UK. Considering the average starting salary in the UK is £24k, this is a sizeable chunk of your monthly pay.

So, what’s the answer? To start, it’s good we’re beginning to be more open about our finances and asking for help. While everyone’s situation is different (and therefore will require different financial tools), thinking about and asking how we can improve our future financial health is important. Being proactive and getting on the front foot early provides the best opportunity to set yourself up for the future, and hopefully improve your quality of life as a result.

Bola Sol is a financial influencer, coach and author